Atty. Luisito Dimaisip

July 16, 1986 Atty. Luisito Dimaisip 209 JAA Building, Quezon Blvd. Cor. Timog Avenue, Quezon City Metro Manila Sir : This has reference to your letter dated April 17, 1986 inquiring from this Commission regarding our legal basis in disallowing your proposed corporation from using the name "S. Law Corporation Philippines. prcd You posed this query because in our letter dated April 14, 1986, you were advised to change your corporate name inasmuch as the words "S. Law" stand for Sathian Lawsiripaiboon",a non-resident alien incorporator, whose investment is limited to only thirty percent (30%) of the outstanding capital stock and as such, said words cannot be used as part of the corporate name of your proposed corporation. Hence, your aforesaid query. The Commission has adopted the following guidelines in the approval of corporate and partnership names: xxx xxx xxx (d) If the name or surname of a person is used as part of a corporate name or style, the incorporators must have a basis for such name or surname. For instance, the name or surname may be that of one of the incorporators. ... Commonwealth Act No. 108, as amended, otherwise known as "Anti-Dummy Law", however, penalizes the intervention of aliens in the management, operation, administration or control of a nationalized enterprise or activity. In connection therewith, this Commission had occasion to render an opinion to the effect that under Book Two of the Omnibus Investments Code (P. D. 1789) where the total investments of non-Filipino nationals do not exceed 30% of the total outstanding capital of the enterprise, the intention of the law is to grant alien investors only proportionate representation in the Board of Directors. The Board of Investments, in its letter dated September 2, 1983, likewise opined that "to allow a firm, the majority of the outstanding capital stock of which is owned by Filipino nationals to be controlled by the foreign stockholders owning the minority of the outstanding capital stock by permitting them a majority of the seats in the board of directors would be a clear circumvention of the spirit of the law and therefore, should not be countenanced" ( SEC Ltr. to Atty. Lorenzo R. Solis dated October 3, 1983 ). Under the circumstances, it is believed that if the participation of foreign investors in the board of directors of a corporation is limited only to their proportionate share in the capital of the same, the more reason that the use of the non-resident alien's name, whose equity is limited to only 30% of the outstanding capital stock should not be allowed because the same would be in clear circumvention of the spirit of the law. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman